Credit repair companies help to rectify your credit scores to the best where possible. Credit scores, also called FICO scores, show the creditworthiness of an individual. When you take loans and lines of credit from financial institutions, the institutions report your card usage or the loan payment patterns to the credit bureaus. Credit bureaus give you poor credit scores when you misuse your line of credit or when you default loans. In such a scenario, you require a credit repairing company. But what is the best credit repair company?
Various credit repair companies help repair your credit scores by employing various mechanisms to help in credit building. These institutions are different from banks, credit unions, and mobile wallets. We shall see some of these companies later so that you can check which one fits your needs. Sometimes people may find themselves in a bad credit scenario without their wish, and there is a need to repair their credit scores for the better.
For example, if you had taken a loan during the Covid’19 period and lost a job, you may not have got money to repay the loans, and your lender may have gone ahead to report you negatively to the credit bureaus. That means the credit bureaus will use the information given to them about your poor loan repayment to rate your creditworthiness. However, it is possible to rectify the poor scoring, as we shall see.
Which are the credit bureaus that calculate credit scores?
Three main credit bureaus calculate credit scores/ FICO scores. They include the following.
- Experian
- TransUnion
- Equifax
All the credit bureaus use the same credit score calculation model to come up with your overall scores. Furthermore, they work independently depending on the information given to them by various financial institutions. There may be errors in any credit bureaus, and once you notice it, you can always report for an action to be taken.
But how is the credit score calculated? Well, many people usually wonder how credit bureaus come up with credit scores. It is crucial to understand that credit bureaus rely on various pieces of information to come up with your credit scores. They check your payment history, amount of money owed, credit mix, length of your credit, and new credit applications.
The five pieces of information give the lender a general view of how you have been using your line of credit and other types of loans. It is essential to know that the credit bureaus also come up with your credit report that shows deeper details on how you have been using your lines of credit and loans.
How are credit scores calculated?
Let me now show you how credit scores are calculated so that you may be on the safe side when using any line of credit. Some people have poor credit scores because they do not know how credit bureaus calculate their scores.
As I have just mentioned above, the credit bureaus use various pieces of information from financial institutions. Each piece of information has its weight on the overall scores, as we will witness shortly. The payment history and the length of your credit contribute most to the final scores at a given time. Let us see how each one of the information pieces contributes.
i) Payment history
The payment history contributes up to 35% of the overall credit scores. In your payment history details, the credit bureaus can see how you have been paying your loans and lines of credit. If you have been paying well as per the agreements with your issuer, you will likely have excellent scores. However, if you have been paying poorly, you are likely to have poor credit scores.
ii) Amounts owed
This portion also contributes a significant portion to your credit scores. Up to 30% of your overall credit scores are from this piece of information. If you use too much of your line of credit, you will have large amounts of debt to pay, which negatively affects your scores.
It is safe to use only 30% of your credit limit to be on the safe side. Remember having different types of credits does not harm your scores. It’s just borrowing too much that lowers your overall credit scores.
iii) Length of credit history
The length of your credit contributes up to 15% of your overall credit scores. If you have been using your loan for a long period, then this piece of information will have a good impact on your overall scores. If you started using a credit card or took your first loan recently, you are likely to have low credit scores. You will need to increase your activity with your credit card to grow your credit scores faster.
iv) Credit mix
Credit mix contributes up to 10% of your scores. You can take various types of loans such as credit cards, mortgage loans, auto loans, student loans, personal loans, etc. The more types of credit you take, the more you grow your scores as long as you pay as per your issuer’s agreement.
v) New credit
If you apply for a credit, your scores drop due to the hard inquiry the concerned financial company has to make. The more you apply for new credits, the more your scores drop. New credit application accounts for up to 10% of your overall scores.
How do I get my credit scores?
You can purchase your credit scores from the credit bureaus. All you need is to create an account, and you will be good to go. You can also obtain your scores for free from your credit company when you log into your account online. Also, a credit company by the name FICO sells credit scores. There is a company called Credit Karma that also issues free credit scores from Equifax and TransUnion.
Knowing your credit scores is essential to know which kinds of credit cards to apply for and develop a method to improve your credit scores.
Does the credit report contain credit scores?
Some people think that a credit report has credit scores. Well, that is not the case. A credit report does not contain credit scores. You have to check your credit scores separately, just as I have highlighted above. A credit report contains the following details.
1. Identifying information
Identifying information includes personal information such as your full name, Social Security number, address, and date of birth.
2. Credit account information
Credit account information includes the types of accounts you have, the date you opened those accounts, account balances, loan amount or credit limit, and payment history. The report does not contain accounts not reported to the credit bureaus. Also, accounts that you closed may not appear in the report.
3. Inquiry information
Your credit report also contains the hard and soft inquiries. Hard inquiries are from financial institutions that ask about your credit scores when you apply for credit. Soft inquiries are from those who want to know about your scores before they offer you services. A good example is an employment company. Insurance or current lenders may contact reviews about your credit scores by making a soft inquiry.
4. Bankruptcies
Your public details about your bankruptcies are contained here. You can see the filing date and type of bankruptcy.
5. Collections accounts
If you have accounts submitted to the debt collectors, they will appear here. Such accounts include credit accounts and accounts with retail stores, doctors, hospitals, banks, cable companies, or mobile phone providers.
How do I get my credit report?
Everyone has a right to a free report every year from each credit bureau. The reports might differ from each other, and you should be keen to report any error with the concerned credit bureau. Checking your credit report can help you notice identity thefts, wrongly spelled names, as loans and lines of credit wrongly reported.
Which are the best credit repair companies?
Various companies assist you in credit repairs; they include the following. Have a look.
1) Credit Saint
Credit Saint is the best overall credit repair company. It has continuously received an A+ rating from the Better Business Bureau over several years. Once you register with the company, it assigns you a personal advisory credit pro to monitor your case and contact you periodically to provide updates and answer your questions.
There are three plans to choose from: Credit Remodel, Credit Polish, and Clean Slate. The plans range from $79.99 to $119.99 per month. The initial setup fees range between $99 and $195. It is crucial to note that all packages come with a 90-day money-back guarantee, plus free initial consultation.
2) Lexington Law
Lexington Law is highly rated credit repair companies that can help you regain your lost glory. The company employs the services of attorneys and paralegals, which is contrary to many credit repair companies in the US. The teams can give you personalized advice about your credit scores.
Interestingly, the company gives you a free credit report consultation before choosing the best credit repair option. You can choose from three main plans:
- The Concord Standard plan at $89.85 per month
- The Concord Premier plan at $109.95 per month
- The Premier Plus plan at $129.95 per month
3) CreditRepair.com
The credit repair company requires you to pay for the first work at a $14.99 fee., then pay the basic rate for all other services at $99.95 per month. The company officially begins by getting credit reports from all three credit bureaus.
With the company, you can successfully address late payments, collections, judgments, charge-offs, bankruptcies, repossessions, foreclosures, and any items older than seven years.
4) The Credit People
The credit repair company gives you the best guarantee on your money. You can get a 60-day money-back guarantee if you are not satisfied with the services for any reason. The payment process is also excellent as you pay a $19 setup fee then get a 7-day trial period, after which you pay $79 per month. It is during the free trial period that you will decide if you need the services.
5) Sky Blue Credit
With this credit repair company, you will be able to receive the best value as you receive a free consultation when you join for the first time. It has simple pricing of a $79 fee for the first work and $79 per month, or $119 a month for couples. The company starts by getting your free credit reports from the three credit bureaus. Your money has a 90-day money-back guarantee.
You will be able to receive helpful advice on how you can improve your credit scores. You will get goodwill letters, debt settlement, cease and desist letters, and debt validation.
6) The Credit Pros
Credit Pros is the most aggressive credit repair company in the country. The company has been in business for several years and has helped many customers repair their credit reports. The company provides a free app that you have to download to help you in the self rectification process.
Once you pay for the services, you will get a 90-day money-back guarantee. You can have confidence when paying for the services since you know that there is a possibility of getting your money back.
7) Pyramid Credit Repair
The Pyramid Credit Repair is the best for customer service. You can get credit repair services for only $99 a month for single persons or $198 per month for couples. Amazingly, you can stop the service without penalty at any given time.
8) Ovation Credit Services
Ovation Credit Services harbors experienced credit repairer officials who will take you throughout the repair process. You have to pay the $89 first work fee when you sign up and get a case advisor, free consultation, and personalized credit dispute options.
9) Credit Versio
This is credit software that can help you to repair your credit scores. The software uses artificial intelligence to scan negative items in your report that pull down your credit scores. It can even generate tailored dispute letters that you can submit to the relevant credit bureau. You can select a plan that fulfills your needs.
Bottom line
Credit scores measure your creditworthiness when it comes to getting loans or lines of credit. When you get poor credit scores, you can easily repair for better ones using credit repair companies. Credit repair companies employ advanced skills either using software or human expertise.
Credit repair companies rely on your credit report to bring things in order. You are entitled to a free credit report from any three credit bureaus, including Experian, Equifax, and TransUnion.
